Amendment of section 115-O
40. In section 115-O of the Income-tax Act, after the Explanation to sub-section (1A), the following sub-section shall be inserted with effect from the 1st day of October, 2014, namely:––
“(1B) For the purposes of determining the tax on distributed profits payable in accordance with this section, any amount by way of dividends referred to in sub-section (1) as reduced by the amount referred to in sub-section (1A) [hereafter referred to as net distributed profits], shall be increased to such amount as would, after reduction of the tax on such increased amount at the rate specified in sub-section (1), be equal to the net distributed profits.”.
Notes on Clauses:
Clause 40 of the Bill seeks to amend section 115-O of the Income-tax Act relating to tax on distributed profits of domestic companies.
Sub-section (1) of the said section provides that any amount declared, distributed or paid by a domestic company by way of dividends shall be charged to additional income-tax at the rate of fifteen per cent.
It is proposed to amend the aforesaid section so as to provide that for the purposes of determining the tax on distributed profits payable in accordance with the said section, any amount by way of dividends referred to in sub-section (1) as reduced by the amount referred to in sub-section (1A) of the said section [referred to as net distributed profits], shall be increased to such amount as would, after reduction of the tax on such increased amount at the rate specified in sub-section (1), be equal to the net distributed profits.
This amendment will take effect from 1st October, 2014.
